Vending

Who’s afraid of the pandemic? Not this convenience services startup

The founders of Capital Provisions in Los Angeles have not let the pandemic deter plans to establish a convenience services operation utilizing state-of-the-art technology.

Woody Kassin, CEO, and Frank Conley, markets program manager, review one of Capital Provision’s micro markets.

February 24, 2021 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

2020 was an unlikely year to get into the convenience services business, with customers going into shutdown mode and limiting their activity.

But for the partners who founded Los Angeles-based Capital Provisions, a disruptive business environment was not a reason not to act on a vision — to create a convenience services operation using state-of-the-art technology in a market that wasn't embracing it.

It wasn't as if the partners weren't familiar with the convenience services business. They include private investors and management with extensive experience in the convenience services industry.

The team recognized the benefits of state-of-the-art technology, and believed not enough companies in Southern California were utilizing technology.

Franco Benitez, route manager, checks on a machine with Chris Watson, vice president of vending services, in the company warehouse.

COVID-19 reset some plans

"We had a set of plans and strategies we were working from early in the year (2020) and then all of a sudden COVID happened and we took a step back and just modified our strategies to reflect what was happening," said CEO Woody Kassin, who joined the company in March, 2020, bringing a background in management, finance and food.

"The only environment we have operated in is the COVID environment," Kassin told Vending Times in a phone interview.

While COVID has been a challenging business environment for a convenience services business, it hasn't been all negative for the startup. One of the company's key growth strategies is acquisition. Kassin believes the business environment that has delivered as much as a 70% revenue hit to convenience service operators in Southern California has created more acquisition opportunities for the company.

Capital Provisions has already acquired three convenience services companies and has several others pending.

"We are constantly on the lookout to add acquisitions," said Kassin, who has reached out to over a hundred companies in Southern California. "Anything under $5 million (in annual sales) is on our radar."

Business slowly improves

And while COVID remains a challenge for the company, some closed accounts are reopening, including schools.

"We see that (schools) as a pretty nice growth vehicle going forward," Kassin said. This will depend on how many schools open in the fall.

In addition to the school accounts, many other businesses have reopened in recent months in accordance with state law, although there are minimum capacity requirements. Kassin is hopeful activity will return to pre-COVID levels by the spring.

Technology plays a major role

Besides acquisitions, the other key growth strategy is to build organic sales. This is an area where Kassin believes the company's access to state-of-the-art software will be highly beneficial.

The company's vending management system provides sales reporting, inventory management and route mapping as well as a payment system that includes a touchless payment option. The touchless option has proven especially helpful during the pandemic.

"It's a completely touchless experience, which is a really nice thing to offer employees given what's happening with COVID," Kassin said.

The vīv mobile cashless from Vagabond Vending in combination with card readers allows customers to choose how they want to pay. It also allows Capital Provisions to dynamically schedule price changes during slow times, offer rebate products and a loyalty program. In addition, the vīv customer app allows managers at customer accounts to order breakroom and janitorial supplies at their convenience.

"All those things allow us to more effectively communicate with the customers," Kassin said.

The company is offering a 50% discount to micro market customers to download the vīv app on their first purchase to drive adoption of the app.

COVID drives customers to cashless, touchless

As businesses reopen, Kassin believes customers will continue to prefer cashless and touchless technologies, which bodes well for the company.

The majority of vending machine purchases are already cashless, he said, and as the company acquires other convenience service businesses, its converts all cash-only machines to cashless. The company experiences a 30% sales increase in machines when cashless payment is added, Kassin said, although in some environments, cash is preferred.

Like many operators, Kassin believes micro markets offer a more economical way to serve perishable food than vending machines. Hence, there are currently no refrigerated or frozen food vending machines. All perishable food — sourced from local restaurants and food distributors — is provided in micro markets.

"We see a tremendous opportunity to convert existing vending accounts to markets," Kassin said.

As a young company with less than 10 employees, many employees have more than one responsibility. The company is currently interviewing candidates as it negotiates more acquisitions; four are pending.

Operating from a leased warehouse in San Diego, Capital Provisions employees are required to undergo temperature checks and are provided access to masks and hand sanitizers. They are required to sign into most customer locations, some of which also require temperature checks.

Ambitious growth plans

Once the company is fully staffed, Kassin expects to introduce an automated warehouse management system and will pre-kit all deliveries in the warehouse.

The company also expects to have a uniform delivery vehicle as opposed to the current mix of trucks and box vans.

The company is not yet offering coffee service or pantry service, and there is no plan to have a food preparation operation.

Kassin did not wish to reveal sales, but said they are hoping to reach the $5 million mark in 2021.

As challenging as the current environment is, the Capital Provisions team believes technology creates a bright future for convenience services.

For an update on how the coronavirus is affecting convenience services, click here.

Pictures courtesy of Capital Provisions.